Introduction to Online Business Models

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Everything from Advertising to Multi-level Marketing

Online business models - Niche Website Newbie

As you read through the pages of Niche Website Newbie, you will learn quickly that the online business model we recommend is Affiliate Marketing. But there are many other business models and many of them are perfectly legitimate ways to earn a full time income online.

With that said, there are some online business models that are pure scams and “believe it or notthere are business models that are somewhere in-between.  Part of creating  a successful online business is learning to identify and avoid a scam, because you will run into them, if haven’t already.

Let’s take one minute to review my definition of a scam.  To me a scam is any program that intentionally deceives someone to take their money.  The deception can come in one of many forms, but in the world of making money online, the deception usually includes the following:

  • Making unrealistic promises about income or profit
  • Making unrealistic claims about the amount of work invovled with success
  • Not disclosing hidden fees or charges
  • Making unture claims about one’s own success

What is Multi-level Marketing?

One of the more popular online business models today is multi-level marketing, also known as MLM. To define multilevel marketing, all we need to do is look at the name. MLM success relies heavily on layers, meaning that you have people that report to you and they have people that report to them. It is 100% about… “You tell 2 friends and they tell 2 friends…”.

Before we go any further, I want to make a few thing known, First, Multilevel Marketing is not the same as Network Marketing. I can see where the uninformed may believe that these two business models are similar, if not identical, but they are not and we will explain why.

Also, I want everyone to know that I believe MLM is a viable business plan and can work for many people. The problem I find is that Multilevel Marketing very often uses some less than preferred business practices. This is where I draw the line; some of the business practices that I refuse to accept are:

  • Selling to family and friends
  • Using high pressure sales tactics
  • Keeping large inventories of products or starter packages
  • Low quality products or services
  • Product claims that cannot be support with facts

Should a program that you are considering involve any of the above characteristics, you may be part of a multi-level business plan and should evaluate your path forward. Remember, as I have said many times in this website, it is not my place to make decisions for you, all I can do is give you the information you need to make the best decision for your situation.

The next question I hear very often is “Are MLM and a Pyramid Scheme the same thing?”. This is an interesting question because the word “scheme” makes the whole situation sound shady. The answer to the question is… NO a MLM marketing plan or business model is not a pyramid scheme.

A pyramid scheme is an investment plan in which one individual recruits two or more people who recruit two or more additional people, who all invest in the scheme. The investments from the latter participants are used to pay upstream participants and so on… Eventually someone loses their investment and the scheme falls apart, but not before the originators of the scheme are rich or in jail.

What is Network Marketing?

Networking is a vital part of being a successful business person.

What is an Advertising Business Model?

As you can see from the explanation above MLM can be one of the more complex online business models, advertising on the other hand is one of the simplistic business models. A pure advertising website will most likely have no selling involved at all.

If you have an Advertising website and you are using an Advertising Network, such as Adsense, then all you need to do is sign-up and place the ads on your website. Of course you will need to attract visitors if you want to make any money, but there is virtually no selling involved in the process.

This may be an attractive model to someone who is firmly against sales of any kind.

What is Drop Shipping?

What is Amazon FBA?

What is Affiliate Marketing?

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